A new report by Raiffeisen Bank considers the CEE region's banking sector as healthy and puts Romania in a reduced group of high banking growth countries in the region. Covering Central and Eastern European EU members, the CIS countries ( Russia, Ukraine and Belarus ) and others, such as the Balkan states, the report found that overall the region's banks gained profitability in 2011.

Russia, Poland, Czech Republic, Slovakia, Romania, Serbia and Albania were identified as high growth markets with a good performance in 2011, while Russia and Poland were further picked out as the region's banking stars. Looking at the local situation, Ionut Dumitru, head economist of Raiffeisen Bank Romania, said that macroeconomic factors had made 2011 a challenging year for the Romanian banking system and that not all banks had returned to profitability, “ but there were some banks that had satisfying profits, showing the capacity to resist in a highly uncertain environment.”

The report also found a growth in loan level and no real signs of a credit crunch. Talking about local prospects, Ionut Dumitru expects growth in local non-governmental loans and better performance from loans to companies than individuals. He believes the local banking sector is in reasonable shape for the next year: “We believe the banking system is financially solid and well regulated, high levels of solvability and liquidity allow it to absorb potential shocks from external markets with minimum possible effects.”

The overall regional picture saw the banking sector as a whole becoming profitable and the stabilization of Non Performing Loans. The average total Return on Equity in the CEE region rose to 12.8 percent in 2011, compared to 10.4 percent in 2010. “The increasing profitability in the CEE banking sectors on aggregate was clearly supported by a stabilization of non-performing loans (NPL) in the CEE region as a whole,” said the chief analyst of Raiffeisen Research Peter Brezinschek.

Liam Lever, liam@romania-insider.com